Banking on Bondage: Private Prisons and Mass Incarceration

Executive Summary

The imprisonment of human beings at record levels is both a moral failure and an economic one — especially at a time when more and more Americans are struggling to make ends meet and when state governments confront enormous fiscal crises. This report finds, however, that mass incarceration provides a gigantic windfall for one special interest group — the private prison industry — even as current incarceration levels harm the country as a whole. While the nation's unprecedented rate of imprisonment deprives individuals of freedom, wrests loved ones from their families, and drains the resources of governments, communities, and taxpayers, the private prison industry reaps lucrative rewards. As the public good suffers from mass incarceration, private prison companies obtain more and more government dollars, and private prison executives at the leading companies rake in enormous compensation packages, in some cases totaling millions of dollars.

The Spoils of Mass IncarcerationThe United States imprisons more people — both per capita and in absolute terms — than any other nation in the world, including Russia, China, and Iran.

Over the past four decades, imprisonment in the United States has increased explosively, spurred by criminal laws that impose steep sentences and curtail the opportunity to earn probation and parole.

The current incarceration rate deprives record numbers of individuals of their liberty, disproportionately affects people of color, and has at best a minimal effect on public safety.

Meanwhile, the crippling cost of imprisoning increasing numbers of Americans saddles government budgets with rising debt and exacerbates the current fiscal crises confronting states across the nation.

Leading private prison companies essentially admit that their business model depends on high rates of incarceration. For example, in a 2010 Annual Report filed with the Securities and Exchange Commission, Corrections Corporation of America (CCA), the largest private prison company, stated: "The demand for our facilities and services could be adversely affected by . . . leniency in conviction or parole standards and sentencing practices . . . ."

As incarceration rates skyrocket, the private prison industry expands at exponential rates, holding ever more people in its prisons and jails, and generating massive profits. Private prisons for adults were virtually non-existent until the early 1980s, but the number of prisoners in private prisons increased by approximately 1600% between 1990 and 2009.

Today, for-profit companies are responsible for approximately 6% of state prisoners, 16% of federal prisoners, and, according to one report, nearly half of all immigrants detained by the federal government.

In 2010, the two largest private prison companies alone received nearly $3 billion dollars in revenue, and their top executives, according to one source, each received annual compensation packages worth well over $3 million.

A Danger to State FinancesWhile supporters of privatization tout the idea that governments can save money through private facilities, the evidence for supposed cost savings is mixed at best.

As state governments across the nation confront deep fiscal deficits, the assertion that private prisons demonstrably reduce the costs of incarceration can be dangerous and irresponsible. Such claims may lure states into building private prisons or privatizing existing ones rather than reducing incarceration rates and limiting corrections spending through serious criminal justice reform.

This year, advocates of for-profit prisons trotted out privatization schemes as a supposed answer to budgetary woes in numerous states:

Arizona has announced plans to award 5,000 additional prison beds to private contractors,

despite a recent statement by the Arizona Auditor General that for-profit imprisonment in Arizona may cost more than incarceration in publicly-operated facilities.

Arizona's Department of Corrections is the only large agency in that state not subject to a budget cut in fiscal year 2012 — in fact, the Department's budget increased by $10 million.

Although the assertion that private prisons save taxpayer money is highly questionable, supporters of privatization, according to a recent news report, claim that privatization in Florida is necessary to rein in the prison system's budget, which stood at $2.3 billion in 2010.

A recent editorial in the Orlando Sentinel expressed the view that privatization "has eclipsed and shelved potentially more fruitful, cost-effective changes. One of them is sentencing reform."

On September 30, 2011, a Florida court enjoined the Department of Corrections from implementing the privatization of prisons in 18 counties, finding that the planned privatization failed to comply with procedures mandated by state law.

The court stated, "[t]he decision to issue only one [request for proposal] and only one contract for all 29 prison facilities [subject to proposed privatization] was based on convenience and speed, … rather than on any demonstrated savings or benefit advantage."

Ohio recently announced that it will become, on December 31, 2011, the first state in the nation to sell a publicly operated prison, Lake Erie Correctional Facility, to a private company, CCA.

Notably, the head of Ohio's corrections department had served as a managing director of CCA.

The claim that prison privatization demonstrably reduces costs and trims government budgets may detract from the critical work of reducing the state's prison population.

Louisiana narrowly defeated a proposal, pushed by Governor Bobby Jindal in a desperate attempt to generate short-term revenue, to sell off three state prisons to private companies.

The Louisiana House Appropriations Committee blocked the bill by a vote of 13-12, with legislators expressing deep concern about the wisdom of selling off the state's assets.

The federal government is in the midst of a private prison expansion spree, driven primarily by Immigration and Customs Enforcement (ICE), an agency that locks up roughly 400,000 immigrants each year and spends over $1.9 billion annually on custody operations.

ICE now intends to create a new network of massive immigration detention centers, managed largely by private companies, in states including New Jersey, Texas, Florida, California and Illinois.

According to a news report, in August 2011, ICE's plans to send 1,250 immigration detainees to Essex County, New Jersey threatened to unravel amid allegations that a private prison company seeking the contract, whose executives enjoyed close ties to Governor Chris Christie, received "special treatment" from the county.

The fiscal crisis confronting the federal government, however, has done nothing to dampen Washington's spending binge on privatized immigration detention.

Atrocious ConditionsWhile evidence is mixed, certain empirical studies show a heightened level of violence against prisoners in private institutions. This may reflect in part the higher rate of staff turnover in private prisons, which can result in inexperienced guards walking the tiers.

After an infamous escape from an Arizona private prison in 2010, for example, the Arizona Department of Corrections reported that at the prison, "[s]taff are fairly 'green' across all shifts," "are not proficient with weapons," and habitually ignore sounding alarms.

Private facilities have also been linked to atrocious conditions. In a juvenile facility in Texas, for example, auditors reported, "[c]ells were filthy, smelled of feces and urine."

Just three weeks before the release of this report, prisoner fights in several locations throughout a private prison in Oklahoma left 46 prisoners injured and required 16 inmates to be sent to the hospital, some of them in critical condition.

The risks to safety confronting inmates in private prisons are especially relevant at present, as the U.S. Supreme Court considers a case that could, depending on the outcome, prevent federal prisoners in private institutions from seeking compensation for constitutional violations — including deliberate indifference to prisoners' physical well being.

Shrewd TacticsCertain private prison companies employ shrewd tactics to obtain more and more government contracts to incarcerate prisoners. In February 2011, for example, a jury convicted former Luzerene County, Pennsylvania Judge Mark Ciavarella of racketeering, racketeering conspiracy, and money laundering conspiracy in connection with payments received from a private prison developer.

Tactics employed by some private prison companies, or individuals associated with the private prison industry, to gain influence or acquire more contracts or inmates include: use of questionable financial incentives; benefitting from the "revolving door" between public and private corrections; extensive lobbying; lavish campaign contributions; and efforts to control information.

* * * *

Part One of this Report traces the rise of the for-profit prison industry over the past 30 years, demonstrating that private prisons reaped lucrative spoils as incarceration rates reached historic levels. Part Two focuses on the supposed benefits associated with private prisons, showing that the view that private prison companies provide demonstrable economic benefits and humane facilities is debatable at best. Part Three discusses the tactics private prison companies have used to obtain control of more and more human beings and taxpayer dollars.

The time to halt the expansion of for-profit incarceration is now. The evidence that private prisons provide savings compared to publicly operated facilities is highly questionable, and certain studies point to worse conditions in for-profit facilities. The private prison industry helped to create the mass incarceration crisis and feeds off of this social ill. Private prisons cannot be part of the solution — economic or ethical — to the problem of mass incarceration.